We examine whether industry structure in an economy can be affected by its banking sector’s lending policies. We use staggered inter-state bank-entry deregulations that took place in the US during 1980s and early-1990s to analyze whether banks play a role in industrial convergence across economic regions. State-pair inter-state banking deregulations allow us to identify the effect of banking integration on industry structure. We calculate for each state the under- and over-specialized (with respect to GDP-share in the overall US economy) industries. Using an Arellano-Bond estimator, we find that more external finance dependent industries that are under-specialized in a state grow faster (in terms of industry value added, gross operating surplus, and compensation of employees) when banks (located in states in which the same industries are over-specialized) enter this state (through acquisitions of local banks) following deregulation. We find no impact of bank entry on a state’s under-specialized industries when the same state’s banking sector integrates with other states that are also under-specialized in the same manufacturing sectors. Our results are indicative of a banking channel in shaping the industrial landscape. Joint with Neslihan Dinçbaş (HEC Paris) and Tomasz Michalski (HEC Paris).